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Helton Law Firm, PLLC

Family court does not have jurisdiction over bankruptcy matters

The language that is used in property settlement agreements or orders in Tennessee is important, as a case in Georgia demonstrates. In that case, which was decided by a federal bankruptcy court, a family court's property division order was found to be invalid.

In the case, a man filed for Chapter 13 bankruptcy protection two weeks after his divorce was final. The court had ordered the man to pay his ex-wife $53,000 as a property division payment. He was also ordered to make monthly child support payments of $1,300. The wife filed suit in the man's bankruptcy case in order to prevent the bankruptcy court from discharging the $53,000 payment based on the family court's order.

The bankruptcy court ruled against the ex-wife as a matter of public policy. It found that family courts may not deem certain property division payments to be non-dischargeable in bankruptcy. Family courts do not have jurisdiction over bankruptcy court decisions. When people are drafting proposed settlement agreements for their divorces, it is important that they are careful with how the agreements are written so unforeseen consequences do not later happen.

In some cases, people will agree to lump-sum payments that are intended to be spousal support. If they choose to handle their alimony issues this way, it is important that the agreements clearly state that the amounts are spousal support. Child support and spousal support cannot be discharged in bankruptcy. If the judge in the above case had simply ordered the man to pay $53,000 to his ex-wife as spousal support, then the bankruptcy court would likely have upheld it. It may be a good idea for people who are divorcing to get legal advice from experienced family law attorneys about their proposed property division agreements before signing them.

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